Short term risks and uncertainty factors
Biohit’s key risks are related to to prolongation of coronavirus (SARS-CoV-2) pandemic, the success of product registrations, the selection and development of new market areas and distribution channels and personnel recruitment.
Significant short-term risks are associated with the normalization of Biohit’s product demand and the success of product registration. The recent increase in uncertainty factors associated with international politics may have an unfavourable impact on the company’s business. It is also critical in the short-term to implement the changes in Biohit’s product portfolio and processes according to new EU regulation, 2021 (MDR) and 2022 (IVDR), so that the sales of the existing products can continue.
Prolongation of COVID-19 pandemic can increase bad debt risk among Biohit’s international distribution network. The continuation of the shortage of components due to the COVID-19 pandemic may also have a negative impact on Biohit’s sales.
The duration of the product registration process is different in each market area. For this reason, it is not possible to accurately assess the time taken for the authorities to handle registrations and for product sales to begin. The distributor is responsible for the registration process.
When investing liquid assets the objective is to gain a return on investment with a minimum risk of equity loss. The investment portfolio consists of deposits, money market investments and corporate loans. A fundamental aspect in portfolio management is sufficient diversification across different asset classes, investment instruments and counterparties. The investment portfolio is subject to interest rate risk, which is managed by adjusting the duration of the portfolio. In addition general instability in the financial markets impacts negatively on the value of the investment portfolio.
The Group’s investment in Genetic Analysis AS unlisted shares is subject to changes in the terms of transactions involving the company’s shares that take place between third parties. A negative change of 30 % in the valuation of Genetic Analysis AS shares would have a negative pre-tax impact of EUR 0.2 million on the Group comprehensive income. Investment in Genetic Analysis AS is also subject to changes in EUR/NOK foreign exchange rate. In addition Genetic Analysis AS is dependent on securing external financing in its operations. Genetic Analysis AS valuation changes have no effect on company’s cash flow.
Biohit’s customer base is widely diversified, with the exception of GastroPanel® sales in China, which currently represents a major single business for Biohit. For this reason the company is dependent on the success of this business in China. Otherwise the company is not significantly dependent on individual customers or project deliveries. Most of the company’s business is conducted in euro and the indirect effects of currency exchange rate fluctuations are considered insignificant.